Intensity modulation, that is AM modulation, in optical systems suffers for the fact that continuous wave (cw) optical sources to be modulated, such as lasers, have inherent intensity modulated (AM) noise on the light wave envelope. Thus any intensity modulation system starts out burdened by an initial noise level which is introduced by the laser source itself even before modulation by the message signal and processing by the various components which typically introduce their own noise. Further, both the techniques for AM modulation--direct injection current modulation of a diode laser, and indirect modulation using a Mach-Zender interferometer--suffer from limited linearity. The problems associated with AM modulation could be eliminated by using FM modulation. However, diode lasers which are susceptible of FM modulation suffer from intensity noise and phase noise as well as incidental amplitude modulation which accompanies all FM modulations at high enough rates to be widely utilized.